>> here is a look and what is coming up alive today. in about one hour at 11:00 eastern, the u.s. chamber of commerce and the organization business europe will have a conference looking at trade priorities for this year for the world trade organization. we will have that for you live on c-span at 11:00 a.m. eastern. a couple of political events today -- mitt romney and rick santorum are in illinois at of the state primary tomorrow. mitt romney is in chicago for a speech on the economy at the campus of the university of chicago. will have that live on c-span at 1:15 p.m. eastern.

live on c-span 2, rick santorum is in dixon, ill. at the waterfront plaza at 1:00 p.m. eastern and is the second of four events he will hold today where there are 69 delegates up for grabs in the republican presidential primary tomorrow. congress returns today presented me to add 2:00 p.m. today for general speeches and they will resume consideration of a bill aimed at loosening at security regulations on small to medium- size businesses at 4:30 p.m.. they will have three votes to mark to limit debate on the bill an amendment involving investor protection and we are authorizing the export/import portion. the house is back today at 2:00 p.m. for alleges that of work for the first roll call votes of the week after 6:30. paul ryan may release his budget plan this week and we could hear remarks on the floor about that throughout the week. live coverage of the house is here on c-span. remarks now from former federal

reserve chairman paul volcker who spoke last week at an economic forum. this is about one hour. >> i am not the youngest guy around. i have heard many introductions over those long years and that introduction stands as the most recent [laughter] we have quite a challenge here today. when i looked at the program, there are 20 strong minded economists on the program. they come from across the intellectual spectrum.

they come from a range of occupations. and that is only a sampling of all the professional talented that is in this room right now. we have collected many years of academic learning and practical experience to draw upon. you would think that would account for something. it keeps coming to my mind that with all this collection of wisdom available, i have to ask -- how did we ever get into this economic mess? what is even more and-out is how we get out of its -- may was even more in doubt is that we get out of it. i'm told at the end of this program, larry summers will be here. he has a responsibility to clarify all the analysis and all the priorities and what we should do and what we should not

do and then go out and do it. my assignment as a little different. i am here to be a little provocative i want to emphasize a longer-term perspective. i have some idea about how we should approach that longer-term perspective. what we all know is that the role of a political economist has lost the sense of self- confidence it once had. i entered the united states treasury in the early 1960's in the midst of the triumph of keynesian thinking. the consensus than was and i can give you quotations from some of the leaders than. we have conquered the business cycle. instead, we ended up with a long period of stagflation.

we had to invent a new word to illustrate the circumstances. more recently, in the 1990's, we had those be nine years of the washington consensus of rational expectations, loss of efficiency, we even for a year or two managed to balance the budget. then without much anticipation, it all went bad. the big lesson in an inherently uncertain world, we should be wary of than a seemingly simple and all embracing approach toward economic policy. a period of success seems to perversely breed conference -- confidence and accesses. those excesses' produce the next crisis. it was haim minsky to

rationalize that observation of repetitive cycles into a. of the seemingly inevitable it repetitive financial crises of the 1980's that nobody was listening. the economy has perked up in the last few months but in my mind, we are still far from satisfactory level of activity. my impression is that there is still a isslog ahead of us before we can claim anything like success. rising consumption, broadly based on lower savings, and they pick up in inventories do not a strong and lasting recovery make. housing and commercial construction looks like they are

remaining flat for at least a year or so a and. business investment has come up from a low-level but it is still lagging well under previous peaks. export markets are slowing as heavy weather in europe in particular. i don't have been in silver bullets for short-term growth patterns. i know that for the immediate future, we have to do what we can to sustain the recovery. that inevitably means maintaining fiscal and monetary stimulus for a while. that is not a recipe for sustaining a healthy economy over time. indeed, we should know that pressing stimulus to long will be counterproductive. i suspect it is hard for many of you to go with those generalities.

we need to make the more basic and necessary reforms that will sustain growth in the economy. we are in an environment of well-finance resistance to change. and a deep-rooted political polarization. in that respect, i could speak at length about needing reform in the financial system very i have had a lot of barberton to to to that recently. let me simply say that financial reform is a work hath done. some important areas have not been touched. the mortgage market is one but what about the accounting and auditing processes? what about credit rating agencies and money market funds? to mention some foreign areas that so far -- to mention some important areas that have received very little attention even in those areas where international consensus seems to exist, it is difficult to

actually implement new capital and liquidity standards. they are important parts of the dodd-franc legislation and the need to be melted down, the important parts dealing with its derivatives and more important parts dealing with too big to fail and, yes, the volcker rule as well. i want to emphasize something different today, not the problems of the financial system but the imbalances in the real economy. and what to do about them. simple fact is the united states is a high consumption economy. that has been true for years and it has been true recently even when in, has lagged. for a decade, consumption has run through a collective willingness to save, consumers

took on a heavy load dead in the process, mainly in home mortgages. to some extent, that process was propelled by the absence of real income growth for most households extending over a decade or more. that is something that is simply not supposed to happen in a healthy, growing economy. productivity gains are supposed to be widely shared. instead, we have had a concentration of income growth of the very top of the population, 1% or less. the income distribution has not been seen so top-heavy since 1929 which is an interesting point of comparison. something similar went on with the federal budget. we reduced tax rates and

increase both military and mandated spending. the financial manifestation of those private and public deficits was rising indebtedness. for the nation as a whole, it is inexorably lead to net borrowing from abroad. ranging as high as 5%-6% of our gdp. that did not appear so threatening when the surplus countries, china and japan particular, were willing to sell manufactured goods to us and satisfy our consumption desire and accept payment in dollars. interest rates were low, even lower overtime, and for the time being, given the problems in europe and japan, in the absence of any strong alternatives to the dollar in the emerging

world, our ability to borrow cheaply abroad fortunately remains. i also think it is true that borrowing is symptomatic of an underlying disequilibrium that simply cannot be sustained indefinitely who could have imagined a china during this century would accumulate at $3 trillion worth of reserves and other foreign countries are, in effect, announcing a large chunk of our budget deficit as well as our balance of payments. the inescapable conclusion to me is that it is not too soon to think hard about the medium and longer-term. even as we continue with the stimulus right now. i know there is no political consensus today.

strong forward-looking action appears beyond reach pat least in this election year. if the electoral process does not produce some common ground for constructive policy decisions, i fear that sooner rather than later, unbearable pressures out will come to bear upon monetary policy and some combination of a weak dollar and rising interest rates. financial institutions and markets, even if we fully implement them, would be in jeopardy again. none of that, i suspect, is new to most of you. the budget deficits and grab their attention day-by-day. i think the result has been more political posturing than thoughtful reform.

i wonder, in all my navete weather even in this contentious election year, we cannot clarify the issues and at least lay the groundwork for needed reforms. the national commission on fiscal responsibility is a long and for the simpson bowls commission. we have had the domenici-rivlin commission. we had the aborted budget agreement last summer in the midst of the debt ceiling debacle and all that suggests some ground, some common ground. my point is that none of those approaches went far enough in terms of the economic program really need.

start bye stage, let's setting out some points that seem to me to command support in general terms if not in detail. right across the political spectrum. to start, do we want a strong military and national security system? if so, and i think we do, we have to assume that for the time being, cuts in those areas will have to be reasonably limited. do we need to pay more attention to our decaying infrastructure? if so, and i think that's correct, that means more spending rather than last. much of it should be through state support and states are very heavily challenged at the moment. we do need to sustain are much admired systems of higher education in particular but

education at all levels, higher education in particular is being threatened at the state level by extreme purgatory pressures. we need to bring about a financial balance in the social security system in the decades ahead. we need to do it without significantly adding to reliance on already high payroll taxes. of course, there is the biggest jobs of all in the health care expenditure pattern. i have nothing to add to that particular subject on the health care side. i do want to point out that i have seen no new proposals that to not concede that expenditures will continue to rise faster than the gdp deflator. it is just a question of how much. today, the federal government spends close to 25% of gdp.

that is well above any previous peacetime level. some of that reflects stimulus spending which should diminish over time but even taking, literally, they must extra and proposals by the simpson bowls commission, the spending level would only go down to 21% of gdp which is well above past levels. that would take years to reach that goal. even then, as we look at the spending level and look at the present tax system, we cannot come close to balancing the budget. in fact, the revenue system is show shoppers is a shelter with exemptions and credits that it

is leaking badly and the system is so complicated it is hardly comprehensible. as they stand, the tax base is unlikely to sustain its historic level of 80% of gdp nor does political reality, administrative capability, were administered -- policy analysis suggests marginal tax rates to be appreciably increased across the board and still generate enough revenue. the implication is obvious. very large changes are necessary. they need to be structural. they need debates in and this is a year to pursue the process. the beijing even beyond the sense of-bowles approach. -- the simpson-bowles approach.

they even take a page from the reagan policies of 1986. he increased taxes three times during his administration after the initial big reduction in tax rates. in 1986, exemptions and credits were, in many instances, reduced and in some cases ended. the resulting revenue increases, was argued, would permit lower marginal income-tax rates consistent with a net increase in revenues making an effort to reduce the budget deficit. simplification and revenue enhancements may, in concept, both the possible in one fell swoop. a complementary approach to simpson-bowles should be taken.

all that seems to me to be part of a constructive debate. it is perhaps political possible in time but i don't want to stop there. my plea is for greater boldness. we do need tax reform. we need to think hard about relying more on consumption- based taxes, avoiding moving business abroad and think about possible incubation of corporate and personal taxes. we need to consider the impact of federal spending policies on state finances with consequences for infrastructure support and medicare responsibilities. i might remind you that between 500 and $600 billion of federal expenditures each year go to the states. we need clarity and consistency

in state taxation and whatever one says about the debate, clarity and consistency do not apply. we need to consider how all tax and spending decisions bear upon the desire for energy independence, bear upon the threat of global warming and the environment. all that is a tall order. i could go on obviously much longer. is it impossible to do? all i can say is i hope not. better to set out a larger framework than settle for inadequacy before the debate even starts. consider whether there are brought in fact areas of common concern and a possible

consensus upon which to build a. . most important, we need to understand how much is at stake. the united states cannot be an isolated island. we live in the world of swirling concerns, economic, political security. that poses large opportunity but also grave threats which is perfectly obvious. one part of the problem is the united states can no longer claim almost unchallenged leadership of the world economy. decades after world war two, it was the american vision and american strength that shaped the world economy, an economy increasingly market driven, open

to international trade and investment with unprecedented standards of living and whole nations rising from poverty. in relative terms, we have lost our economic position. we are still the largest, richest, most innovative economic, able to develop and attract the best talent. we can still bring our influence to bear. for that, we have to do better. there is no way the united states can exist in isolation. we want to help shape those important forces in the world's. we want to ship them in the direction of democracy and prosperity. we cannot do that with military

force or political influence a loan. -- alone. indeed, only a strong and open economy can support and to assure our national security, maintain a sense of global leadership, and provide a bowl war against opposing systems. a -- bulwark against opposing systems. it will take effort to rebuild some sense of common interest and undertake the economic reforms we need. that is a big challenge. it is a challenge that may seem at odds with the electoral realities. when we sit back and the election is over, we had better be prepared.

as was said not so long ago by those in the new administration, let's not let the lessons of economic crises go to waste. that that can be a slogan for the next administration as well. thank you very much. [applause] >> thank you very much. for those of you don't know, i am steve clemens, washington editor of "the atlantic." let peopledon't leave their seats. we do it at your seats and we will do that as regards discussing. we will have staff at the hotel quietly clear your plate. we're not taking a break at this and will proceed first question --"the atlantic"issued what i

like to call our money issue. they called the finance issue. ben bernanke was on the cover and i was talking with people who want to see ben bernanke as a villain as opposed to a year and they see ben bernanke as a villain for keeping interest rates so low that either inflation or other baubles are being created. if you were fed chairman say, would you have the fed redware ben bernanke does? >> i am not there so i don't have to beg that great judgment. [laughter] i have a regular practice of from refraining. >> we just want to see if you've given up that practice. >> when i saw that, it reminded me even today -- i occasionally in the streets, someone comes up to me and says you are the whobate - the sob

prevented my parents from buying a house in the 1980's because interest rates were 15%. others say thank you my father bought securities a low rate and temperature college. >> that is good. let me provoke you for a moment and ask you about your view about what happened during the financial crisis and the creation of financial instruments, derivatives, which you have said created a lot of d opaqueness. opaque anmness some say you have a generation of people that despite what

happened with the financial crisis, there is strength in the kind of leverage in that is out there and there has been an overreaction to financial innovation. >> the answer is evident. i heard all those songs about the benefits of this very complex financial engineering and how it was diffusing risk. the impression was that risk kind of disappeared and of which can only sell derivatives to people who have a use for them, that is fine. the people to want to gamble with them, you have a situation with some of these numbers that are enlightening. credit defaults what did not exist. there were only invented in 1997 or something like that. they did not exist earlier. by 2007 or 2008, 10 years

later, there were $60 trillion worth of credit defaults walz outstanding. credit defaults swaps are supposed to provide the kind of insurance policy reported you get one of these swaps to protect yourself when you hold the security against default. a case in point right now -- how do you have $60 trillion of credit defaults swaps outstanding to insure $6 trillion of the total debt outstanding? something is going wrong here that did not have a very close connection. with the economy. elements of the casino are very complex within dependencies. when it came under pressure, not

just from credit defaults loss but otherwise and the system can under pressure, it collapsed. i would like to use the word ' collapsed.' that is a good description when it took hundreds of billions of dollars of government support in the united states and the u.k. and europe and japan to support the system. that is not a viable, a dynamic private enterprise system if it is relying upon that kind of government support when it came under pressure. that does not say the financial system was responsible for everything that happened but we know that it fell apart when it came under pressure. >> today there is a remarkable of bed in " the new york times" by a gentleman who just quit goldman sachs apparently today, it may have been last night.

he orchestrated his resignation letter along the lines that was an indictment on goldman sachs for playing in that casino economy and what he considered to be irresponsible ways and ways that undermines the interest of the country. do you have any thoughts on that? >> that was a strong piece but it is a reflection of a change in market mentality over the past 20 years or the past 15 years. goldman sachs, for instance, has long been the most respected of the investment banks. they are very sensitive to avoiding conflicts of interest and focusing on their client needs. just to take the example of that firm, they went public. they used to be that their partners were raised earlier. in the mid-1990s there were not

public and i had a big trading operation. like other investment banks, that became a trading operation rather than a largely customer- oriented underwriting m &a kind of operation. the mentality changed and i'm afraid it is a business that leads to a lot of conflicts of interest. it leads to enormous compensation when you are doing well and that as of this is very attractive to young people and all these firms could attract the best of american graduates whether they were philosophy majors or financial engineers. if they were good, the rewards are so great that a lot of that talent was siphoned off into wall street. how much of that activity is really constructive in terms of

improving productivity and the gdp? these were brilliant years for wall street from one perspective. were they billion years for the economy? there is no evidence of that. the rate of economic growth and the rate of productivity did not pick up. as i noted earlier, the average household had no increase in annual income during this period. we had an unbalanced economy and since you have given me the opening to have a few advertisements, the so-called volcker rule which is a into proprietary trading, speculative trading by commercial banks that buy the major are protected by the government and indirectly subsidized by the government and shouldn't the government be subsidizing and protecting institutions that are engaged in

essentially speculative activity often at the expense of customer relationships? does that lead to a culture and -- of conflicts of interest that we can do without? i hope to reform america's little progress and get rebalancing of incentives in the financial system. i hope we will return to old- fashioned concerns about lending to medium and small businesses and taking care of your deposits and the critically important functions of the banks that are making payments accurately all over the world in all kinds of contortions. that is the job of commercial banks. that is not a job for specialty institutions. hedge funds can speculate or people can speculate

individually but they should not be protected by the government. i could give him my long lecture on financial reform. those firms have got to be speculating during proprietary trading but they should not be rescued by the government when they get in trouble. that is their responsibility. [applause] take the hedge funds -- they are largely, in the past, financed by partners, limited partners. they are financed by equity. as it should be. banks are basically financed by [inaudible] >> as i read the volcker rule, you were hoping for a more robust version of this than we wound up with. is that accurate? >> all this fighting about

response from banks and so forth is too robust. >> they want to make it a little v not a big v. >> they said it will not have any room to breathe. they may have interpreted it too strictly. this gets into a current philosophical question about financial or other regulations. can you put out broad principles and try to make sure that the bags or what ever understand the principles and then you check up on them later and try to master might all the to the transactions? that sounds sensible but it goes against the grain of the regulatory philosophies in the united states and particularly the philosophy of those regulators.

they have droves of lawyers coming down asking exactly what you mean by this. if we hold the security for three days, is that ok but four days is not? if you are not telling us that, tell us that. you don't want to get into that detail. that is what this argument is all about them we will have larry summers up here later. there are a lot of people who have been key economic advisers to presidents. one of the people coming up as the one that has the key job now which is gene sperling, the economic adviser to president obama. he was profiled the other day. as i dug into it, it looked like a lot of the pieces were things that you and austan goolsbee had worked on and thought about earlier. do you think the president is three years too late with his

jobs and infrastructure proposal? would you have sequenced what the obama administration put forward different light? would you put more on jobs and infrastructure on the front end? >> if i was president of united states, i would have figured this all out and would have had a sophisticated program. we have not got the kind of problem. we have the backwash. a tsunami had as in the financial system. -- kept us in the financial system. the tsunami was debt. dent in this economy relative to the size of the economy doubled. it increased by 2.5 times. over 50 or 20 years. at the end of the day, it's strangled us. for a while it financed a great boom in home building but as soon as the prices went up, we

could not handle the debt. people had not said because it was so nice to borrow money. you borrow on the mortgage and took out the mortgage and a home-equity loan and your credit card and it was great until the music stops. ped. i understand it. we have been living in a situation where there is no magic. we want to give the support we can we are doing that with fiscal policy. we're doing that with extreme monetary policy but there are not many buttons to push. with the infrastructure, maybe we should concentrate on that. it takes years to develop infrastructure projects and do

it efficiently and effectively. we have agreed brigid your kidneys to be replaced. -- we have a great bridge in new york that mr. be replaced. if someone gave you $10 billion to replace the bridge, it will take six months to make the designs for the bridge much less hire the workers. that will be a big component of the program moving ahead but it will not rescue banks before the election. >> you wrote an op-ed recently warning again about the dangers of inflation. i think you began to seek the chinese are worried about it and the united states has so much of debt at one way out of this trap is to inflate one's way out and it will shrink and the chinese end up with a lot less than we have. you said that was dangerous and i would like to understand what

you are scared about. >> when i wrote that, i was concerned that in the natural frustration about the economy moving rapidly, there are some people and i think one or two people and the federal reserve that said maybe we should think about having a little inflation if we have a little inflation, people will spend money more freely. let's have a little inflation and that will pep everything of. up. that is a doomsday scenario because the people? we took that as a policy, interest rates will not remain at 2.5%. there will ask what they are lending at those rates of the federal reserve itself is aiming for 4% inflation. stimulus andt any

you will make it a lot harder to restore a sense of price stability which i think is crucial. the federal reserve has done a good job at st. know we don't forget about the importance and they should take -- stick to that theme of all open questions to the floor and take questions. >> i will ask our servers and we're grateful for your helping us but i will ask you to keep it as quiet as you can get it sounds like crickets up here but we want quieter crickets. george soros at the brentwood summit that we were at last year described the financial crisis as the super-bubble peripatet. he said responded -- responding to a super-bubble requires a different kind of orientation, the typical to you used to

respond to a recession, will not order. he would often say of larry summers is right, he will succeed but larry summers is wrong, and i'm right, or the application of a tools they did in this recession will fundamentally not solve things. where do you come out to? was it a super-bubble that burst and we failed to remedy the problem or has larry summers, while he was in his position using more conventional tools in responding to a recession, succeeding? >> forget about the personalities. >> cnbc is here and they liked names. >> i am anonymous. the question is -- was as a super-bubble? yes, that qualifies on that score. there was characteristics that were not amenable to a quick

fix. the garden variety business cycles we thought we got rid of the 1960's, we did not. you had some access is in business investment and may have some at excesses' and housing and buildup in inventories. it was not an enormous scale. when the economy went down and interest rates went down, it did not take long for the adjustments to be made and particularly what happened, because home building and other building is responsive to interest rates, when the interest rates went down, you pretty quickly got a rebound in housing. you did not start out with the enormous excess of housing. this time, we had an enormous excess of housing. there is still 2 million homes either in foreclosure are going to base. -- or going to be. you have no rebound in housing.

forget about the typical mini- recessions which were not pleasant but the wordv-shaped. it was not that way after 1929 and was not that way after this one. all things considered, i think we're doing pretty well. we had a couple of years of expansion and that is better now and the unemployment rates are coming down. we cannot ask for more than the economy is able to reduce in the short run because we have not eliminated all the excesses', the overhang of houses, the overhang of debt is still there. >> let's take this first question -- identify yourself, please. >> i am with the center for economic and social justice. one of the major points that were made this morning was that there needs to be a challenge to

the existing economic paradigm. dr. volcker, you confirmed that -- that there is a need for change but there is also a need for the big picture. there is one big hole in the economic paradigm. it is reflected rigid >> please phrase in the question because i just don't have time for statements. >> the question is -- why, in the existing economic paradigms' of all schools of economic thought, do they only focus on labor and not on ownership as a potential additional way to of achieving shared prosperity? that is changing the tax system, changing the federal reserve policies, changing -- adding back glass state also there is more regulation and

separation of powers within the financial industry so that capital credit is different than consumer credit? all these things fit into a way in which you can't expend capital ownership as we have done under laws for employees. why can't we do this universally for every man, woman, and child in america? >> thank you. >> one of the things that you are suggesting might be desirable to go back to. people don't talk about going back but there are worried about high-yield support and investment as opposed to consumption which is a key issue. there is a push back against the paradigms of efficient markets.

national expectations pre much gone which drove a lot of regulatory thinking and market thinking in the past decade or so. if you are trying to sort out the kind of thing you're talking about where we need the debate, that comes down to questions of fiscal policies and tax policies and spending policies. my hope is that there is more agreement that can be developed with more consensus in the body politic than is apparent right now. it is not apparent right now in the midst of this election conflict. i tried to argue and i continue to argue that we can find elements of agreement. >> next question and i will ask our service to keep the noise

down identify yourself. >> my name is n markadell and you said the country need something more substantial than which will bees unpopular. what is the most important economic policy that obama needs to convince the democrats to support and what you think is the most important economic un popular policy that the republicans need? >> i think one side needs to sketch out a basic vision that they see particularly for budget policy and fiscal policy and taxes nc upon which points they converged at which point they do not converge upon.

is there any possibility of reconciling? during the election campaign, the answer to the ad isno. will there be enough sense of divergence that whoever wins the election has some basis for a strong and comprehensive program. i would say in some respects, going beyond sompson-bowles on the taxation and spending side. they have gone a big distance toward laying out one set of possibilities and we build on the. >> this gentleman -- identify yourself, please. >> i'm a private investor. my question is about chronic capitalism. do you think the concept of too big to fail might be called too

well connected to fail? why can we have a concept for the u.s. after like we -- like we had after the s&l crisis in texas? >> the question is to how much the rescues to ball buto big to fail were compelled by crass political instincts. i don't buy much. i understand this suspicion. it to begin a habit, it would be a real problem. we had a genuine emergency. i think the extraordinary actions that were taken or not to reward some political supporter or person in our industry. they were taken in the national interest. what turned out in an unplanned chaotic way was an approach that, in some respects, resemble

the oldrfc. in a -- in other words, the u.s. treasury put capital, the u.s. taxpayer put capital into financial institutions. that is what happened with the rfc. it was done kind of helter- skelter in an unplanned way. there is a fear of doing this in what may appear to be an ugly way, a kind of fear that was overdrawn. in an emergency, you put capital into a bank and that is socialism. it implied a degree of government control that was unwarranted. i frankly think that fear was overdone. many countries have had the experience of putting capital into banks in an emergency and they have not ended up gotten the banks and when the crisis is over they withdraw the capital.

i wrote an op-ed piece or two before the crisis was at the breaking point that something r like thefc might be a good idea. the response i did get from mr. paulson was a great idea but is there any possibility of the world getting congress to prove that? the answer was probably no. he had enough trouble getting the congress to approve after the crisis. the evidence was so apparent. >> peter schiff? the microphone is not on. >> maybe that's better. [laughter] [applause] >> it is an honor to last a --

is on tour as the last, but in person to chair the federal you mentioned in your speech that is soft -- you thought were the biggest problems we have as a nation is we bar to much and spending too much. you then went on to praise congress and the fed for the stimulus when the specific goal of the stimulus is to get us to borrow and spend even more if the problem is too much borrowing and spending, how is the solution that we borrow and spend even more? >> there is a word for this but i cannot remember it. it is a medical ward. sometimes you have detailed madison of the disease -- sometimes you have to take a me littledecine -- sometimes you medecine ke a me littledecinlie

to help cure the disease. at the time, we needed a band- aid for the economy and i think a reasonable judgment was that it would be hard to recover from. >> another analogy is if the s urlkidding u-turn and to this kid. after the 1997 economic crisis in east asia, larry severed -- larry summers or of the global growth would plummet if you'd have a global depression. the u.s. economy had to keep chugging away and keep the rest of the world moving. thus, the era of low interest rates would not just keep america gone but the rest of the world moving. when you create the climate, have you created a new set of vested interests which are hard

to turn our of thatskid? are we in a system where we have become addicted to a narcotic of cheaper rates, fundamentally creating a different set of incentives and disincentives that are not healthy and the economy? >> i don't thin this is not a normal economic situation. this is an extreme shock to the economy was comes along pretty rarely. let me go back to the asian crisis -- i was a little bit involved in some of the asian countries at the time who were trying to adjust. larry might disagree with this that we had been for the mexican crisis and a lot of money into

mexico to try to ride out -- >> the exchange stabilization fund to. >> i used to run that fund and i did not know it had that kind of money. somehow it developed out of thin air. it was successful because mexico had recovered but there's a lot of political criticism of the amount of money involved a little while later, the asian crisis comes along. the first reaction of united states government was to stay away. they said was an asian problem and we don't want to get involved in every crisis every place in the world. thailand is a small country and we don't need to jump and. then it spread to indonesia. we did not like the japanese

getting involved is that was our business to get involved. it got pretty bad. then it spread to korea and now you have a bigger country. korea got in trouble so that was going too far. so we jumped in. and health marshall the banks and ameliorate the crisis. indeed, that was a good example of a relatively small country getting in trouble but that country getting in trouble, very sharp fluctuation in the exchange rate, its members got in trouble. at the end of the day, it was

thought quite correctly to say the united states better become more active in this deal and move to stabilize the situation. suppose korea went into default? if they went into default, what other countries would follow? these judgments are not easy but i don't question at all -- if i question and i think about than -- >> let's take these two questions very quickly. we will then move immediately to the next session. >> there has been a lot of quantitative easing and a lot of purchasing of debt. how could you see this unraveling? all the debt that has been issued, all the money that has been printed to basically

purchase the debt and removing >> ? you're talking about the federal reserve? >> let me get the next question. >> you said something to the fact that any initial renovation of fake atm does not do well for growth. what perspective does financial innovation contributed to the widening income gap in this country? >> we're not going to solve the income gap in this country or budgetary problems or priority problems. we got in trouble by thinking financial integration can solve real problems. financial integration -- financial innovation cannot solve real problems or reduce

the amount of consumption or increase savings. forget about financial innovations. [laughter] if there is anything we've had enough of it is financial innovation. [applause] on the federal reserve, this is a very unusual situation. a much bigger balance sheet and other things. but they do not in my judgment present when i would call a tactical problem. as the economy goes, they have the capacity to reverse in an orderly way -- the problem will be the everlasting problems of central banks.

do you begin tightening up soon enough when the economy is launching itself on an as expansion. >> leaving this event as the u.s. chamber of congress hold a conference looking at trade priorities. panelists include business representatives from cisco, calling, and microsoft. >> it goes without saying that both europe and that united states are vested in the international trade system to work together and established rules of the game. we both have a need and desire to create the jobs agenda and what we're going to talk today is how to do that in -- we have a great relationship with business as to other organizations represent around the table and we're pleased to

work with them on a host of issues. these issues include cooperation on the front and the discussions going in on the g a forum and we have business heads of major organizations with us here from europe throughout the day. the discussions you will hear about a european union-trans- atlantic economic and trade pact we have been discussing for six or nine months, we are pleased to have a substantive deep and long term relationship with them. forums like this are not possible without our corporate sponsors. they include ibm and microsoft.

companies have made a tireless effort to move the doha round. but making sure we're going to move it, that it would be a robust market access agreement that would be reached. after many years of negotiation, we have reached this conclusion, that there is an impasse. we at the u.s. chamber have supported these negotiations through many trips. we participated most recently in the wto ministerial conference

in geneva in december. but we have always said it needs to be ambitious and comprehensive and in failing to reach that, we need to look at alternative paths for growth and expansion of trade. it is with that mind set we're going to have this forum today with both american and european business thought leaders to talk about the road ahead. given the state of play in geneva, we believe it is time for business and governments to start thinking about not just alternatives but of value added paths forward. the world has changed since the doha round was launched and it's a critical time to think about ways to enhance not only are corp. but coordination around macroeconomic trade issues.

we believe there are a number of ways we can do that. ita few moments, we'll hear from the ambassador to the wto has done a great job on behalf of the american business community and stakeholders. he will give us his assessment about where we are. but let me highlight the two essential pieces of today's conference. we want to underscore american and european business communities remain committed to the world trade organization and a global rules based trading system. with the impasse in geneva, today's panelist and those who are in this crowd want to see the new approaches to trade liberalization. some of the things that will be discussed will include do we not negotiated international service agreement? interest is growing and exploring opportunities to reach

trade and in services across a number of key sectors like finance, insurance, banking, media, telecommunications, express delivery and other sectors. services are an act -- are an essential -- essential component of the footprint and it has yet to be a major part of the doha round negotiations. it got a low priority. it is important for the interested community to think about how we can launch negotiations toward a comprehensive international service agreement for the end of 2012, something i know this panel will take that with our participant, cisco i am sure will have that on their agenda. second, we want to talk about completing the trade facilitation agreement. this is an area of high promise because there was a lot of traction in the doha round and there is widespread understanding countries can work

toward a multilateral agreement on trade facilitation. there are hidden costs of trade their high that if we were removed them, it will be huge benefits to the global trading system. even as important as removing tariffs. negotiations have been productive and we believe the trade facilitation agreement would garner broad interest and support from the business community. third, we need to build and expand on tariff reduction agreements. in the past multilateral rounds, countries have negotiated many agreements to eliminate or reduce tariffs. sectors included projects running from agricultural equipment, products, paper and steel. we all know of the highly successful information technology agreement signed in 1996 by 29 countries.

it has grown to include more than 70 countries representing 95% of all trade in i.t. products. 1996 is dated. why not strengthen it and include more countries in it? it is appropriate to consider ways to not only consider this the other opportunities. fourth, we want to address non- tariff barriers. non-tariff barriers restricting imports by means of quota or discriminatory regulations. this is a concern not just for big companies paul cos. this issue has grown in importance over the last 25 years and i know for manufacturers, it is only going to increase in importance that we address this in a robust fashion. discussions have been underway

in geneva and i know there are a lot of thinkers to recognize the importance of taking this on but we have to take on squarely and deal with it in a comprehensive way. fifth, we need to identify new and emerging issues. the world has changed quite a bit in the 10 years since the doha route was launched at me to recognize the trading system has changed. we urge member companies to use the current impasse as an opportunity to explore these areas that deserve consideration as part of the free market. one example is the movement of electronic information across borders. it is critical to business from world, but the international rules governing the flow of digital goods, services, data

and infrastructure are absolutely complete. improving the framework for digital trade at the world trade organization should be a priority for all governments seeking to promote innovation and it's a high priority for the chamber and its members. let me conclude my opening comments by saying that we believe there is a huge opportunity for american and european business communities to remain committed not only to the wto, but to look at ways to advance the global economic and trade agendas. when both continents are looking at growth rates that are anemic and need to create jobs, this is an opportunity to work beyond our challenges and find common ground and encourage other countries to participate in a multilateral discussion agenda.

i hope that the conference serves as a road map for 2012 and beyond and contributes to the discussion governments are having. at this point, i would like to turn this discussion over to a very good friend of the u.s. chamber who will be moderating the panel. thank you for coming today. >> thank you very much. always a pleasure to be here with you at the chamber. and the international director of business europe and i have fortunately or unfortunately sped a lot time working on the doha with america a business. i told my wife our firstborn daughter would be called doha. luckily we only have boys so no one had to suffer through that name situation. when christopher and i were talking about the wto and the

situation with the doha round being dead, we said what is causing this? why is nothing happening? one of the issues we looked at was we said when you go to the wto today, there are no more companies around. just us and the association's defending the multilateral system. the companies have disappeared from the discussion. the purpose of our meetings today and in brussels in june, is to bring business back to the wto. this is essential. that is one of the real fundamental causes of the breakdown of the negotiations. that is why ensign of having us come up with ideas, let's give the companies and industry associations a voice to say what they think they can deliver on

and push forward. today in my panel, we're going to talk about the industrial side of the equation. with jennifertart sanford to hear what cisco has to put forward as a company and as a sector and what you can't deliver on. >> thank you very much. it is an honor to be here. i would take a little bit of an exception to companies being absent from the dead buteo in the sense that we have been very busy taking advantage of what the the media has to offer in terms of keeping markets open for multinational companies and a surging global markets. we're very supportive of the wto and think it is working while we are out there

innovating and selling and collaborating. we would like to see the wto work even better for our company and our industry and for all other sectors. i thought i would focus my remarks not just on behalf of cisco, but the u.s. technology industry and talk about what we have been thinking about in the wto as the doha development agenda has foundered. we spent quite a bit of time talking about expanding the scope of our current agreement which has been very successful for our sector. you will hear my colleague talk in the next panel about services and cross border trade and flows and the trade facilitation, so i will save the

best for them in that area but it's definitely a priority. seeinglso interested in other countries to join that wto like russia as well as joined other agreements like the government procurement agreement. enforcement of the existing commence, the industry just went through enforcement and we think there is value in the dispute settlement process these because there are existing commands that are good and we would like to see the government to keep their markets open and abide by them. it i thought i would spend the bulk of the time talking about i.t. a expansion says that is where the tech industry and we

really see an opportunity to open new markets. originally, we started with 29 companies in 1996 and now we are up to 73. i think 44 of them are developing countries. trade has grown from 1.2 trillion dollars to four trillion dollars, so it has been a successful agreement for our sector. developing countries, their exports grew during that time 34%. compared to developed countries exports that grew 7%. it has been successful for everyone, but particularly

developing countries. if you have not read it, i would recommend the very good report written about the i.t. a expansion and what some of the potential economic benefits could be and what they estimate is a two-way trade could grow by an additional $800 million if governments were to successfully expand the scope of the information technology agreement. these are new products that were not around like gps equipment and there are products excluded from the original agreement -- certain types of flat panel displays better used, certain types of semiconductors were not

included or had not been invented says the agreement came into place. what we found is that really a global demand in i.t. could expand by $20 billion were an agreement to be negotiated. with price drops, you see demand grow because of import elasticity. for the u.s., what has been estimated is revenues for u.s.- based i.t. cos could increase by upwards of $10 billion and you could see u.s. exports expand by $2.8 billion helping to support the president's goal of doubling u.s. exports over the next couple of years. and we see job creation, upwards of $60,000 compared to $42,000

for the average wage in the u.s.. where a lot of the benefit is derived is from betty same report that estimates 80% of the economic benefit is from its usage and only 20% from the production of i.t.. when you have price increases -- before india joined the agreement, for every dollar of tariffs, there was an estimated economic loss of $1.30 because of the productivity losses that resulted from companies and consumers not having access to low-cost products. since india joined, we have

seen their services industry accounts for 47% of india's total services exports. nearly half their services exports are i.t. services. we think there is a lot of growing support for expansion with 40 i.t. associations sending a message to their government endorsing expansion of this agreement. in 2011, leaders from 21 economies pledged to provide leadership and launch negotiations to expand the scope. digital europe issued a statement placing top priority on further elimination of duties. that is where our main focus is

this year. there are other areas we would like to see countries officially joining like russia which has also agreed to join the information technology agreement. adoption of the government procurement agreement by countries including china -- we would love to see india take another look at that. enforcement -- we just went through an enforcement process with the european union and we think that put an emphasis on the value of this existing agreement and provided a good example of why it needs to be expanded. we see local content requirements growing and the use of local content requirements being explicit in a number of countries and we're looking hard at those.

i would recommend those who are interested in trade statistics to look at the work made in the world initiative. there is an event here tomorrow special -- sponsored by the russian international trade association because looking at statistics is important because it characterizes how we think about trade and what we talk about where the real value is. >> i think what is important beyond all of the technical issues related to your industry was the story you are telling about how your industry is and enable our for services industries, for procurement, for business to business development. that seems to be an important dynamic on today's panel. i'm going to turn to another in

a bowling industry, the chemicals industry because of your ability to be a business to business and industry and the role you play supplying a number of key industries that are growing today. i would like to hear how your the chemicals industry going for multilaterally. >> good morning and thank you for the invitation. it's a pleasure to be back in washington and it is also an interesting challenge to speak about the wto in 2012. given the fact i feel we have a patient here which is rather ill. maybe we can procure some medicine. chemical compounds will probably help. i'm not in as good a position as jennifer because i cannot say our tariff harmonization agreement has grown and that we

have had a lot of participants where this harmonization agreement was decided. in a doha, i don't think we have a lot of newcomers, but one possibility was whenever someone exceeded that this new member should at least have the tariff harmonization agreement. this was a suggestion coming from industry in 1990. we did not like of the u.s. or you approached on chemicals with respect to tariff liberalization. we as an industry suggested why not reduce the tariffs to a

harmonized level and hopefully eventually eliminate them. the first step was done. then the next step would be let's eliminate chemical tariffs. we would call ourselves the industry of the industry because you would need a chemicals. it's a good idea from a development perspective to eliminate chemical tariffs. what you have to do and a sector approach, you need to look at country coverage and i think there we have quite different views as far as countries are

concerned and one of the obstacles we are facing is the emergence of some of the emerging companies -- emerging countries and their non willingness to participate in the agreement. you also have to look at product coverage and it needs to be clear how you define the sector which should be a part of the agreement. it has always been our view that you take the harmonized system, the karakul at pharmaceutical tariffs, and you put that into your basket for tariff elimination. i think it is very important that you agree as far as the resolutions are concerned and that's one of the problems we see with the tariff elimination

agreement -- the tariff elimination agreement on so- called environmental goods because i don't think you can easily define what is meant by environmental good. if you cannot easily define the sector coverage, i think you run into problems. what is the issue today? we would like to see the chemical tariffs eliminated and that requires two things -- either you do such an allegation with a critical mass of countries and that means those countries who are new were on the scene, and particular china should take part in such an agreement.

if you look at how the chemical industry developed in the last 10 years, you see the biggest chemical industry seems to be the chinese and then the chinese and the third biggest is the japanese and the fourth biggest is the german karakul industry. they are in the top league and they should eliminate their chemical tariffs but not only them. some 30 countries altogether which to have significant chemical industry should join a plural lateral agreement. those countries get together, eliminate chemical tariffs and apply these terrorist to the rest of the world. i am not sure whether a poor lateral approach would work and

i'd don't think we would be able to agree to such a suggestion because you could have a significant violation of the principal if just half of the rules eliminate chemical tariffs but we do not supply them into the other half of the room. you need to understand how you go about this and other important issue is no exceptions. we have made the proposal that there should be no exception to these rules because if you start negotiating on exceptions, everybody in the room will have exceptions. if you hang your exception on the negotiating proposal, the have a swiss cheese with more holes than she's. we're quite clear we don't want any exceptions.

it must be clear that at the end of a certain day, you need to have a 040 agreement, and that did not occur last year. on that andworking we are convinced it is the best thing to do for the future wto. >> we have had a discussion focused on the tariff side of the equation but now i am going to ask robert hamilton from amway who is going to talk about the non-tariff equation. we talk about technical barriers to trade, but maybe you can tell us about some of the ideas that are real -- realistic and achievable and that business could get behind. >> thank you. i am unusual speaker to speak to a trade group because i don't

directly get myself involved in the wto or trade agreements. i product guy. in trying to get products and to markets. amway is a global company, so i am on the downstream end of all of these trade agreements. our activity supports the wto and a free trade agreements, but we also believe there are other actions that need to be taken. i would like to address this from a bird's-eye view because of the fact that there are so many details i could not hope to accomplish them in the brief time i have been given to speak. but i think all of you would agree with the sentiment of winston churchill's that 10,000 regulations make for pretty bad

law. our effort, as with yours, is to try to see a reduction in these technical barriers to trade. lead to look at what is it that motivates technical barriers to trade. then i think we can look at is a few examples relate it to technical barriers to trade and and i will present some suggested solutions we believe might be a good approach. tariff barriers to trade are driven by politics to a great extent. there are nations who would say they raise these barriers to be protective of their citizens and to protect their industries. but for the most part, the recipients of the tariffs are their governments and the governments are the beneficiaries of these arrangements. but when it comes to technical barriers, there are other

motivations. there is protecting the health and safety of the citizens of the countries. there are desires to protect the environment, to level the playing field so that businesses can be more effective in a free market environment. with all of this good will, what could be wrong with them? clearly, there are barriers and spent restrictions are not a desirable thing in a free-trade environment. what is it that makes these technical barriers truly not allow for free trade question arafat's as a scientist, i would hope we could deal with the social concerns, the human health and safety and environmental safety with international standards or an

agreement with good risk assessment principles. the difficulty is with those kinds of principles. we have issues that are not easily satisfied by science. i think of the fukushima disaster and the impact it had not only in japan, but on trade throughout asia. many citizens in korea, taiwan and china were concerned about products that came from japan and the raw materials that would go into products made in their country but coming from japan. it did not make fifth that there was scientific justification suggesting these materials were safe. citizens did not want to see them in the marketplace.

even in an area in europe where you think there is an easy obligation of good science, a genetically modified organisms have created a lot of barrier within the european marketplace. in the united states, not so much? where's the science? there is a necessity for governments i'm afraid to create these technical barriers to trade even without a science- driven decision. so what is the solution? we suggest education a good start and unfortunately, the wto or the free trade agreements don't solve that problem. we have participated with a lot of education in china on the

issue of vitamins and food supplements. we encourage educational aspects, presentations by the international association of dietary supplement association, a group that represents across the board all kinds of companies in many different sectors and an opportunity to look at regulatory practice and the safe use of dietary supplements and even look at abuses and how those abuses are contained. we have been able to see an opening of that marketplace to dietary supplements. it is important to recognize

that be on the social concerns, there are business concerns. the need to have a fair playing field. there are many countries concerned they missed the train, missed the opportunity to be effective competitors and if they open their market to free trade, the more advanced companies will enter the marketplace and swamp out the competition. that creates an effort to freeze the marketplace to create non- tariff barriers to trade at stop new technology. by bringing in technologies from other marketplaces to build a quick, makeshift regulatory

environment. all of the concerns the chinese government had with the -- theyation of milke will save our industry is not quite ready and we to have more restriction not just for imports but also our own industry. that convenient barrier is an opportunity to advantage their industry within china. one of the things we look at is how do we answer those questions? how do we give a reduction in this year for competition? one of the things we do is to try to encourage regulatory agencies to see that global competition is inevitable, that freezing the marketplace will only delay the competitive

opportunity for industries within their own country. they need to dive in with a little more abandon and we need to diminish some of the concerns they have by allowing industries in more developed countries to enter into those marketplaces and create industry associations and provide training and exercise common cause in areas where it is possible. in areas where the environment is concerned. in areas where we are talking about fairness of competition, advertising planes and how they are substantiated. we feel is important to provide that kind of outrage on a business to business basis as well as a business to government

basis. but of course, the real problem with technical barriers to trade are the political problems where governments are trying to enter in and influence marketplaces. one of the things we see is there is a speed to market with new regulations at as regulations are developed slowly in europe and the united states, take up speed as they enter markets like china or smaller markets in southeast asia because they can borrow the regulations and adjustment to their needs. is like mobile phones. you do not see a lot of land lines in developing countries and you do not see a problem with the development of regulations in those countries. you need to have the concern of

overcoming suspicion. really emphasizing the principal of the scientist or you would say the simple regulation regulates best so that if you accomplish the goal without unnecessarily affecting the marketplace, you have the best possible regulation. we look at the need for emphasizing simple and straightforward regulatory policy. in terms of the gettysburg address -- 266 words given by abraham lincoln over a century and a half ago and lincoln is still remembered and many people in the united states and perhaps the world can recite the gettysburg address. there was a cabbage regulation

in georgia that had 10 times that number of words i doubt anyone knows the words of that regulation. simple and straightforward as what we're looking for. but to accomplish that, we need trust. companies need to develop a reputation outside the united states. our reputation has grown in china and we feel like we have almost a 100% recognition of our name and that's impressive but it is a new record for us. it is not characteristic of other markets where we have been. so i think a new perspective on how we approach markets has helped us a great deal.

all of us need to find ways to cooperate at support the wto and work for free trade. i think we also need to look for ways of lowering suspicion, increasing understanding, and appreciate not only the needs are companies, but would need our governments, but the need to the citizens who are going to be using our products. i believe there is a great opportunity for business to be more involved as the wto moves forward. >> thank you very much. but i would encourage you to give your speech to the environmental european group because they're a very responsive bunch of there. let me take the opportunity to open up the discussion to the

distinguished guests we have who might have some questions. some of the remarks were a little provocative although you had them in your speeches. you touched upon issues like the european union now respecting its obligation and some areas. let's open the floor and get some controversial questions to some of the hidden controversies you had in your speeches. would anyone like to kick us off? i have one for the audience. for those interested in industrial sectors, who could

except to go with the question related to the msn principle. if you were to open all of your markets to the chinese, the brazilians, the indians, and they would not necessarily reciprocate, would your industries go for that or would you try to look at ways to not apply the principle which could be very challenging in the wto? maybe you could clarify this point which is central to want to move forward. >> i would like to come back to where robert has said on tariffs. tariffs will only serve the government. if that is so, let's abolish

them. they are supposed to protect the industry, but if the industry considers it does not need protection any longer, i would go for the argument. the traditional view of poor lateral is this part of the room goes to zero and gives a gift to the other part of the room. it could be conceived that you go on a conditional msn and give too want heart of the room and don't give to the other part of the room, it is difficult. a suggestion had been made to go

with a waiver. i think this is a rather intriguing proposal, but the other issue if we are stacked with our principal is either we get the countries on board or we have to do something on a bilateral basis and this is europe delegation in town today is trying to launch a bilateral agreement whereby you would fully eliminate industrial tariffs and that would also be a possibility. >> any questions? i see you over there.

how do you see relation with poor lateral negotiation of goods? >> it is very difficult as a practical matter and legal matter. the choices that you have are up front at the outset of the negotiation to obtain the membership of the entire wto that something would be applied on a non- msn basis. or you negotiate with the understanding that it will be applied which represents the huge free rider problem which has been discussed. on the good side, there is a fundamental difficulty and we

will hear more later. it's a critical reason we need to be thinking critically and strategically about ways to motivate big players to change their calculation about participating in trade liberalization. -- tradelevelization. >> there was a discussion about non-tariff barriers in this sector as well. has the industry at a global level made any progress on that because that has always been a difficult issue for the industry? >> i think the industry has made progress on non-tariff barriers

and measures. in terms of elimination, the industry is united in wanting to see quick action for tariff elimination through the expansion of product coverage while non-tariff barriers are important and a challenge for we industry, i don't think would like to see non-tariff barriers included in a negotiation that just involves tariff elimination. that would take a long time to negotiate and we are interested in quick action and would like to see something negotiated very quickly. we are hopeful negotiations can be launched very soon. >> i would agree with jennifer that mixing non-tariff barriers

to trade with the tariff reductions is an unnecessarily confusing step. however, i see an explosion of the number of cases which is an indication of the tip of the iceberg. those are difficult cases and i would suggest there are many more instances of barriers than there are cases. this is a real problem and it is a problem that does not address one half of the room verses the other half of the room. it addresses all of the room verses all of the rest of the room. i was unable to because of the complexity, talk about reached. my concern debt european reach regulation which is creating a barrier to less. we manufacture finished goods in

that united states and would like to import them into europe. now they are being regarded as chemical mixtures and we need to become suddenly an expert in the chemical raw materials to be able to register those materials that are qualified for registration. we are competing against companies and downstream users and have no such requirement. that regulation is creating a problem in that it is proliferating around the world where i believe countries are saying we're getting a raw deal and we will create our own tbt that reflects breach in korea, china and who knows where else. this is an issue that, though separate, still needs to be addressed more strongly. >> since you gave your

philosophical discussion, one of the practical point his technical barriers to trade need to be proportional to their aim and that should balance out in principle this altruistic motivations. would it be possible to negotiate a clarification of what this means because it in fact never really applied in practice. what do you think about that? >> i look it my reach example and i look by comparison at what canada has done with care revisions and the chemical regulation in canada did not require individual company registrations. canada was able to gather the info -- gather the information

and do a quick review and prioritize all of the data requirements and demanded there is going to be regulations apply for data gaps and they have actually begun to regulate some materials on a risk basis while europe is still gathering and immense amount of data. i feel like the benefit to the citizens of canada was strong in there is more proportionality. >> i think you touched on a very interesting point because that is called regulatory autonomy. when we speak about non-tariff barriers, i found the arguments

quite interesting insofar as traditionally we have thought if the tariffs are not so important and it seems they are not so important any longer, though we would still like to see them eliminated altogether, we should deal with non-tariff barriers and the actual working group deals with non-tariff barriers. i cannot define what a non- tariff barrier is. we made that proposal and you could say it violates the wto and i would say be my guest. get a law firm and attack it in the patio. i might even help you. but i have looked at that and i don't think it is as easy as you

said. you could argue that it is a proportionate. it is a different approach and i am actually looking for because we have at the moment several cases in front of the appellate body which will hopefully bring some results on what and obstacle to international trade means and the clove cigarette case, the united states is more known than europe because you have prohibited clove cigarettes and that could be an interesting case where we can all see what it means. what we have suggested to the wto as a mechanism which you deal with these non-tariff barriers in a kind of mediation form and you go as you are allowed the companies to

complain about non-tariff issues to go and take a kind of mediation case, not binding on the parties but helping to understand what is the problem. we can go to settlement and it takes two or three years which i think is a relatively short time. very often, my company says this is too much. we have a small problem in a pacific co. -- a pacific country and that mediation mechanism through the technical barriers to trade committee in the wto so we can address these kinds of mushrooming non-tariff barriers without going to [unintelligible] >> my question is why can't you

do the mediation you propose right now? why can you go under the deputy and either raise this in the committee or raise it bilaterally? you can tell people in the good counsel what it means -- i think one of the concerns was that a lot of these issues were basically bilateral issues that did not lend themselves to a big multilateral undertaking. >> i think as an industry, we can do anything and you know that. bdo as ano to the of industry do we can go to the wto as an industry. we have to go to the government and of the government doesn't want to handle these issues, we're stuck. you could say bilara